How Chain Capital Backed U2U Network Plans to Attract Users to Web3 with DePIN

24 May 2024

Welcome to another insightful episode of the "Innovators in Web3" series. Today, we are joined by Chloe Phung, Co-founder & Chief Marketing Officer at U2U Network, a trailblazer in the fintech and blockchain industry. Chloe brings a wealth of experience from her prior roles, including as a Business Development Director at Infina and co-founder of Bvnex. Today, she will share her insights on U2U Network's groundbreaking initiatives and the strategic backing from Chain Capital in their latest seed funding round. We’ll delve into how U2U Network is leveraging this investment to innovate within the Web3 space and their ambitious plans for future growth.

Ishan Pandey: Hi Chloe, great to have you here for our "Innovators in Web3" series. Can you tell us about your background and what led Chain Capital to invest in U2U Network?

Chloe Phung: Hi Ishan, thank you for having me onboard! My name is Chloe Phung, and I am a serial Entrepreneur in the Fintech and Blockchain industry. I currently serve as the Co-founder & Chief Marketing Officer of U2U Network. Before joining U2U Network, I held several key positions at many large companies. One of my pivotal roles was as Business Development Director at Infina, a leading digital investment platform in Vietnam that is backed by Y Combinator. In 2019, I co-founded Bvnex, a pioneering platform for cryptocurrency investment and exchange. Bvnex has become the top fiat-crypto exchange in Vietnam, boasting a community of over 150,000 users domestically, 50,000 in China, and 10,000 in Japan, with a daily trading volume of $84 million and partnered with Binance, OKX & Huobi exchanges.

Recently, we are excited to announce that Chain Capital - a prestigious Venture Capital renowned for their focus on Web3 infrastructure, AI & DePIN, has become the Lead Investor in U2U Network's Seed Funding round. Chain Capital is one of the leading crypto funds in Asia, with a proven investment portfolio of 300+ quality projects, including unicorn Layer-1 ecosystems that have reached billion-dollar valuations such as Solana, Polkadot, Celo, and Algorand, as well as DePIN projects like Filecoin, and Theta Network with a remarkable number of active users. Additionally, it includes several prominent protocols offering scalability solutions like Skale, and Metis.

Their decision to invest in U2U Network originated from U2U Network's strong technological capabilities and our understanding of the industry's needs, including scalability, reliable infrastructure, and hardware development. Simon, Founder of Chain Capital has stated the reason why he and his team invested and also supported with his vast network into U2U ecosystem: "We have been investing in layer-1 for years and haven't seen a layer 1 with a sustainable module for the future in South East Asia, where the market is huge with golden demographics. U2U Network is focusing on DEPIN and later on Real world applications built with a system of subnet technology with various fields (which in the real world, enterprises now need it).

This enhances the scalability and decentralization on demand. We can mark the new era for infrastructure while they don't need layer 2 for scalability but still find good sources from mainstream markets for mass adoption, the go-to-market strategy proves well with 170k wallet addresses and 70k contributor mobility nodes. We support them to fulfill this vision and thrive together with a seasoned team of 200+ who desire to make an impact with local pride. We invest in real running products from last year's stable mainnet, to subnet DPN, and now 80+ Dapps in their ecosystem."

The investment from Chain Capital will support U2U Network in growing a dynamic builder community, expanding user adoption globally, and integrating the digital with the physical through pioneering Web3 IoT devices.

Ishan Pandey: Could you elaborate on the Modular Layer-1 Network and DePIN Ecosystem that U2U Network is developing?

Chloe Phung: Modularity is where the system is composed of distinct components or modules that can be independently developed, maintained, and updated. This design contrasts sharply with the traditional monolithic architecture, where components are deeply integrated and interdependent. The modular structure is marked by several key advantages, particularly its flexibility and scalability. In a modular network, adding, removing, or updating modules can be done with minimal impact on the rest of the system, allowing for rapid adaptation to new requirements or technologies. Each module can be specialized for a specific function, leading to improved efficiency and performance.

In U2U Network, each U2U Subnet is a module designed distinctively to match a specific demand; for example, there is a Subnet for DPN (Decentralized Private Network), a Subnet for Decentralized ID, a Subnet for File Storage, a Subnet for Matching Engine… By allocating each Subnet a discrete application, U2U Subnets can be especially optimized for that task to reach maximum performance without sacrificing speed, reliability, and security, making them suitable for decentralized services whereas most existing blockchains are general-purpose, which are inefficient and easily overloaded.

The modular approach helps us form a DePIN ecosystem where each network operates on a semi-independent Subnet, with a Web3 Domain Name System (DNS) at the core. This system serves as the foundational gateway, akin to traditional online internet DNS, but built on the robust U2U platform. Within this ecosystem, we are focusing on several key components to enhance the structure and functionality of our decentralized internet.

Firstly, alongside the DNS, we are developing a Name Service that goes beyond the conventional Web3 services which typically represent only wallet addresses. Our aim is to provide decentralized domains, such as "IshanPandey.u2u", that can access websites directly rather than just serving wallet interactions. This integration broadens the utility and reach of our DNS and Name Service.

Another crucial element is the Decentralized Identity (DID) system, which is pivotal for implementing identity management and Know Your Customer (KYC) processes in the Web3 world. This will enhance security and trust within our network.

Additionally, our U2U File Storage system plays a vital role in hosting these websites, managing data and files seamlessly within our ecosystem. Our U2U Generative AI is another cornerstone, leveraging data collected within our network to train AI models. This capability is especially useful for AI labs that require data from specific countries or websites, which can be accessed securely via our U2DPN. This process not only supports AI development but also integrates with our U2U File Storage and Big Data Mining solutions to create a comprehensive AI-focused ecosystem within DePIN. These systems collectively enhance data storage, sorting, and analysis, ultimately training sophisticated AI models that serve as inputs for IoT applications.

By advancing these technologies, U2U Network is setting the stage for a revolutionary, interconnected Web3 environment where technology and utility converge for a smarter, more secure internet.

Ishan Pandey: What advantages does the Helios Consensus mechanism offer in terms of transaction throughput and finality time?

Chloe Phung: With years in R&D, U2U Network’s Layer-1 leverages the innovative Helios Consensus mechanism, boasting an impressive throughput of 17,000 transactions per second (TPS) and a finality time of approximately 650 milliseconds. This high-performance framework not only ensures swift and efficient transaction processing but also maintains compatibility with the Ethereum Virtual Machine (EVM).

Besides that, we’ve developed U2U Subnet Technology and OstracismVM as scaling solutions, without sacrificing Speed, Reliability, and Security. DApps built on U2U Subnet will reduce their reliance on the mainnet for data availability. Operating your Subnet means possessing a module on top of a U2U Network while still maintaining decentralization, security, and consensus. Transactions executed on the subnet will affirm U2U Chain scalability, network performance, and near-zero transaction costs.

Ishan Pandey: How does U2U Network plan to leverage Chain Capital’s investment for its strategic growth?

Chloe Phung: The funds will primarily boost our efforts in R&D, especially in the development of the Subnet Protocol, which is integral to creating a more scalable and efficient network. This protocol allows for the creation of individual subnets that can operate semi-independently but still secure within the larger U2U Network framework, reducing strain on the main network, improving overall performance, and making U2U Network a perfect fit for DePIN applications.

Additionally, the investment will accelerate the development and integration of DePIN technologies. This involves expanding the infrastructure to support more decentralized applications, including our development of hardware devices, which are crucial for enhancing user engagement and increasing network utility. Our goal is to foster a robust ecosystem where developers can easily build and deploy DApps that leverage the unique capabilities of U2U Network.

Ishan Pandey: With U2U Network aiming to become a comprehensive ecosystem for Web3 builders, what strategies are in place to ensure its growth and adoption?

Chloe Phung: U2U Network is positioned as a reliable, comprehensive Web3 infrastructure & ecosystem, especially for DePIN applications; therefore, our first and foremost goal is to become a place where any user and developer can join the blockchain realm seamlessly and effortlessly. Essentially, we want to bring the next 100 million users in SEA to Web3 via U2U Network, and allow them to fully get involved with Web3 without ever having to go elsewhere. This requires a lot of strategies across R&D, Partnerships, and Community.

First, we focus on R&D to develop comprehensive Subnets tailored to different industries. Each industry has specific characteristics and technological needs, and evidently bringing all of them onto a single network has been a failure, which we understand why. By specializing in decentralized projects transitioning from Web2 to Web3, we allow DApps to leverage U2U Network's strengths for user growth. For example, the Mobility Node of U2DPN allows contributors to join the network using just a mobile phone, unlike competitors requiring expensive computers. This ease of participation has led to 50,000 contributors across the continent within 6 weeks of launch.

We also focus on building SDKs and CDKs to support both Web2 and Web3 builders in developing DApps quickly and conveniently. Our SDKs provide developers with a set of tools, libraries, documentation, and sample code to build and integrate software applications on U2U Network, while CDKs, on the other hand, are tailored to provide more customization options, enabling developers to modify and extend the capabilities of the SDK to meet specific requirements. These kits are particularly beneficial for complex DApp development, where unique functionalities and optimizations are needed.

Second, we also concentrate on enabling growth through Business-to-Business (B2B) alongside Business-to-Consumer (B2C). One of the unique strengths of U2U Network's technology is its capability to facilitate growth through both channels. For example, with the DPN Subnet, our focus on B2B solutions allows us to provide white-label services to existing Web2 VPN providers and new entrants in the VPN industry. By leveraging our Subnet DPN technology, we can offer a customizable and scalable solution that these companies can integrate into their existing service offerings. Additionally, our B2B strategy includes offering tailored solutions for other industries, such as healthcare, finance, and logistics. By providing specialized Subnet solutions for these sectors, we can address their unique needs and challenges, further expanding our reach and impact.

Third, we find it really crucial to attract developers and builders of decentralized products and applications, especially when the human resources in this space are still incredibly scarce. To address this, we have constantly organized hackathons and introduced project grants of $500,000 in total from the Foundation, ensuring that more developers acknowledge about and participate in U2U Network. Additionally, we have collaborated with global universities to educate the next generation of blockchain developers, particularly on our technology. Via webinars and presentations, we help startups and individuals effectively leverage blockchain technology and scale their projects within the Web3 framework.

Ishan Pandey: In what ways do you envision mainstreaming DePIN and merging the digital with the physical realms through your Web3 IoT devices?

Chloe Phung: DePIN is revolutionizing how infrastructure networks, both physical and digital, are being built. Originally, traditional infrastructure networks are flawed not only in their centralization since they depend entirely on a handful of opaque providers, but also that they require massive up-front capital requirements, operate with inefficient, bureaucratic processes in both marketing & operations, and grow in a closed environment which limits room for innovation as well as collaboration.

So even though it may be unlikely that DePIN can replace traditional networks in the near term, we can definitely see both of them coexisting in the real world. The potential coverage of DePIN is as wide as today’s social infrastructure landscape, from Internet, Data, AI, to services such as Food Delivery, Ride-sharing, Health & Fitness,... I believe the reality where DePIN becomes ubiquitous in our daily life is coming sooner than most expected. However, pushing DePIN to mass adoption will require multiple factors, effort and aspects, and we recognize that developing and introducing Web3 IoT devices is a key element in this effort.

Developing and distributing Web3 IoT devices successfully signifies a leap towards integrating the digital with the physical, creating a seamless interface between users and technology. As shared, a part of the investment from Chain Capital will help to accelerate the development of hardware devices and make us become one of the pioneers in developing Web 3 IoT devices, we are not just envisioning a new era of internet infrastructure, we are actually building it.

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Vested Interest Disclosure: This author is an independent contributor publishing via our business blogging program. HackerNoon has reviewed the report for quality, but the claims herein belong to the author. #DYOR.